The allocation for the ministry in the last financial year (2013-14) was Rs 2,03,672 crore, of which around Rs 80,000 crore was to be spent on modernization. The allocation was announced in the vote-on-account presented by Finance Minister P Chidambaram.

Last time, the hike in allocation was 14 percent compared to the previous year. The ministry had spent 82 percent of that amount till the start of this month. The hike in allocation comes at a time when the ministry has a number of procurements in the pipeline while some are in their final stages and expected to materialize in the coming months.

These include the deal for 126 multi-role combat aircraft which is expected to cost thousands of crores of rupees. Other acquisitions in the pipeline include deals for 22 Apache combat choppers, 15 Chinook heavylift helicopters and the 126 Rafale combat aircraft.

Defence Ministry is also in advance stage of negotiations for a Fifth Generation Fighter Aircraft (FGFA) programme with Russia, on which it is expected to spend around Rs 1.5 lakh crore in the next 10-15 years. It is also in the process of issuing the tender for the approximately Rs 60,000 crore deal for procuring six large conventional diesel electric submarines for the Navy.

The ministry has been seeking additional funds of Rs 40,000 crore since last year, but that request has been turned down in view of the slowdown. In view of certain defence scams in which foreign firms were involved, the ministry has also worked towards promoting indigenization in the defence sector for which it made a major procurement policy change to make the importing of weapons systems the last option for the three Services.